More than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants, according to a report by the International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2019.
On average, new solar photovoltaic (PV) and onshore wind power cost less than keeping many existing coal plants in operation, the report says. Next year, up to 1,200 GW of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV.
Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to US$23 billion every year and reduce annual emissions by about 1.8 gigatons of carbon dioxide (CO2), equivalent to 5% of total global CO2 emissions in 2019. It would also yield an investment stimulus of US$940 billion.
“We have reached an important turning point in the energy transition. The case for new and much of the existing coal power generation is both environmentally and economically unjustifiable,” said Francesco La Camera, director-general of IRENA. “Renewable energy is increasingly the cheapest source of new electricity, offering tremendous potential to stimulate the global economy and get people back to work. Renewable investments are stable, cost-effective and attractive offering consistent and predictable returns while delivering benefits to the wider economy.”
Renewable electricity costs have fallen sharply over the past decade. Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39% and offshore wind at 29%. In 2019, electricity costs from utility-scale solar PV reached a global average of US$0.068 per kilowatt-hour (kWh). Onshore and offshore wind reached US$0.053/kWh and US$0.115/kWh, respectively.
The global weighted-average LCOE of newly commissioned hydropower projects in 2019 was US$0.047/kWh. This is 6% higher than the US$0.045/kWh recorded in 2018 and 27% higher than projects commissioned in 2010. Despite this increase, nearly 90% of the hydro capacity commissioned in 2019 had an LCOE lower than the cheapest new fossil fuel-fired cost option. The increase in LCOE has been driven by rising installed costs, notably in Asia, which have been driven by the increased number of projects with more expensive development conditions compared to earlier projects. This is likely due to an increase in projects in locations with more challenging site conditions.
In 2019, the global weighted-average total installed cost of newly commissioned hydropower projects increased to US$1,704/kW, 17% higher than in in 2018. This increase is explained by the lower share of deployment occurring in China (3.8 GW in 2019) and the higher share of installed capacity deployment in countries/regions with higher average installed costs. In Brazil, for example, 4.6 GW was added in 2019, while there was also a higher share of deployment in Africa and Other Asia in 2019 – all locations with higher than average installed costs.
Recent auctions and power purchase agreements (PPAs) show the downward trend continuing for new projects are commissioned in 2020 and beyond. Solar PV prices based on competitive procurement could average US$0.039/kWh for projects commissioned in 2021. Record-low auction prices for solar PV in Abu Dhabi and Dubai, Chile, Ethiopia, Mexico, Peru and Saudi Arabia confirm that values as low as US$0.03/kWh are already possible.
For the first time, IRENA’s annual report also looks at investment value in relation to falling generation costs. The same amount of money invested in renewable power today produces more new capacity than it would have a decade ago. In 2019, twice as much renewable power generation capacity was commissioned than in 2010 but required only 18% more investment.
IRENA is an intergovernmental agency for the global energy transformation that supports countries in their transition to a sustainable energy future and serves as a platform for international co-operation, a center of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy.